Anglo American (LON:AAL) may be the company that throws a much-needed lifeline to Sirius Minerals (LON:SXX), the British company struggling to build a huge fertilizer mine beneath a national park, thanks to a last-minute takeover bid that values the mine developer at almost £386 million (about $507m).
The diversified miner confirmed on Wednesday that it was in advanced talks with Sirius over cash offer of 5.5p a share, equivalent to one-third more than the targeted company’s market value at close on Tuesday.
Sirius, which is midway through building its Woodsmith fertilizer mine in the North Yorks Moors national park, has seen its share price collapse after warning last September that multibillion dollar funding for the next stage had fallen through. It warned at the time it only had enough cash to last another six months.
The company has already raised £920 million ($1.2bn) to
develop Woodsmith and received the backing of thousands of local retail
investors, but needs a further $3.8bn to turn it into the world’s biggest
producer of polyhalite, a form of potash used in plant fertilizers.
As a last resource, Sirius launched in November a rescue plan involving the participation of a potential strategic investor and a revised two-stage development plan for the mine.
Anglo seems to be just what Sirius has been waiting for as
it said it was prepared to recommend the offer provided it can secure
satisfactory assurances around jobs and other “stakeholder interests”.
If the deal goes ahead, if could save more than 1,000 jobs
in one of England’s underprivileged areas, which goes hand in hand with Prime
Minister Boris Johnson’s pledge to revive poorer regions of the UK.
Long time coming
Anglo American hinted the unexpected bid had been in the
works for months, saying it identified the project as being of potential
interest “some time ago” due to its quality in terms of scale, resources and
costs.
If successful, the takeover would mark a comeback to the fertilizer
sector for Anglo, which owned some phosphate assets in the past but in recent
years has focused on “four pillars” —copper, iron ore, diamonds and platinum.
Construction of Woodsmith, the largest mine to be built in
the UK for a generation, involves sinking two 1.5km shafts and is expected to
create about 1,800 jobs during construction, as well as 1,000 permanent
positions once it opens.
The ore will be extracted through the shafts and transported to Teesside on the world’s longest underground conveyor belt, via a 37km-underground tunnel. It will then be granulated at a materials handling facility, with the majority being exported to overseas markets.
More to come…